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North American observation 丨 A series of relief and aid measures will expire soon
According to various US media reports, Congressional leaders from the Democratic and Republican parties have recently stated that they believe there is hope for a new round of bailout plan to reach a compromise. After months of stagnation, the bailout bill has again seen the light, behind this is the enormous pressure that a series of “old clauses” are approaching. With high expectations from the outside world, if Congress still doesn’t come up with a new version of the bailout bill this time, resulting in a “bailout cliff,” a large number of unemployed people may not receive any relief, evicted tenants and student loan repayments. The consequences of the sudden increase in pressure have not only severely damaged the livelihoods of millions of Americans, but may also plunge the American economy into a new recession.
△ Bloomberg said that more and more Democrats and Republicans are beginning to support the $ 908 billion economic stimulus proposal in the bipartisan framework as the basis for negotiating the final version of the bailout bill in 2020, but there is still many people in the Republican Party leaning towards smaller led bailout bill
Multi-party pressure fuels bailout negotiations
According to the New York Times, the vast majority of independent economists are in favor of passing a new round of bailout plans before the end of the year. Along with pressure from constituencies and the fight for dominance in the new Senate, the Democratic and Republican Parliamentarians have accelerated the pace of action.
Leaders of the Democratic and Republican Congress said on December 2 local time that they believed there was hope of reaching a compromise on a new round of rescue plans. House Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer declared in a joint statement that day that the recently proposed $ 908 billion bipartisan framework should become the basis for negotiations on the new version of the ransom bill.
Pelosi and Schumer stated that this framework “should be used as the basis for immediate bipartisan negotiations between the two houses.” “Of course, we and others will provide suggestions for improvement, but immediate action is needed. We believe that through honest negotiations, we can reach an agreement.”
Democratic congressional leaders are open to the recent announcement of the $ 908 billion bailout plan under the bipartisan framework, marking that bailout negotiations have gained momentum again after months of stalemate. The analysis believes that while Democrats tend to introduce a broader bailout plan, like the $ 3 trillion bill passed by the House of Representatives in May, the reality is that Republicans who control the Senate will not accept a plan of expenses so big. Losey and Schumer said they have expressed some willingness to compromise with the bipartisan $ 908 billion framework as the basis for negotiations.
In response, Senate Republican Leader Mitch McConnell previously stated that the Democratic leader had “expressed a new willingness to sincerely participate.” The next step is up to McConnell and other Senate Republicans. Some of them are not cold about the $ 908 billion cross-party bailout plan that is trying to break the legislative deadlock. What they want is to get it approved this year. A directed ransom bill of around $ 500 billion.
But the problem is that the Democratic and Republican parties currently have “political motives” and hope to show an answer to the economic pain facing some Americans. The second election for Senate seats in Georgia on January 5 of next year will determine which party controls the Senate. Controlling the Senate means the right to approve or block the appointment of the new Biden administration. Both parties want to create a sprint. An image close to people. If the Democrats win two seats, they will “tie” with the Republicans in the Senate, and starting next year they will have a comparative advantage with the key vote of Vice President Kamala Harris. However, it is not easy for Democrats to win both seats.
△ The “New York Times” stated that most economists urged the adoption of a new round of bailout plans, and the newspaper also resolved a series of bailout provisions that are about to expire.
“Bail out the cliff” is coming
Of course, the pressure to actually promote bailout negotiations always comes from people’s livelihood and economic levels. At present, the widely held view in US economic circles is that as the spread of the new corona virus intensifies, the economic recovery has slowed in recent weeks. If Congress does not pass a new round of rescue plan and causes a “rescue cliff,” the economy and people’s livelihoods may increase even more. deterioration. The “cliff” limit will be December 31, when many of the bailout clauses introduced in the spring will expire. The New York Times summed it up as follows:
First, about 7 million freelancers, contract workers, and other Americans who are not eligible for traditional unemployment benefits are about to lose the Epidemic Unemployment Assistance Program (PUA). They now receive an average of $ 1,058 per month in assistance. If they lose this funding, they will soon lose their livelihood.
In the United States, contract workers, casual jobs, and freelancers are generally not eligible for traditional unemployment benefits, but this has changed after Congress passed the stimulus bill in the spring, which provides federal funds to states to allow this “fringe group” to also claim unemployment benefits. This spring legislation is of great importance because during the COVID-19 pandemic, contract work has played a bigger role than ever in the American economy. Once the “cliff” in late December, the extent of the impact is difficult to estimate.
Second, nearly 5 million Americans who have been unemployed for at least 6 months will also be deprived of assistance. These people can now receive an average of $ 1,253 per month in aid, effectively supporting the economic source after “prolonged unemployment.”
The reason that assistance continues to be received after the “unemployment extension” is because the previous stimulus bill included an Emergency Unemployment Benefit (PEUC) program: after the government’s regular unemployment benefit expires , an additional 13 weeks of benefits will be provided to the unemployed. Today, the outbreak has lasted for more than half a year, and more and more Americans have been unemployed for at least 6 months, exceeding the regular unemployment benefit period of 26 weeks, and are being forced to switch to the benefit program for epidemic emergency unemployment. Therefore, the support period has been extended to 39 weeks. Once the “cliff” in late December, millions of Americans will no longer receive any unemployment benefits.
Third, the suspended federal eviction order, which aims to protect tenants from being evicted by landlords, will also expire at the end of December. By then, millions of Americans may face the fate of being driven from their homes. Not only is this a humanitarian disaster, it may also exacerbate the new corona epidemic and make America’s anti-epidemic work more difficult.
Fourth, the student loan grace relief clause will also expire on December 31, when approximately 21 million people will have to begin repaying student loans. Most of the US $ 1.7 trillion federal student loans in the United States can enjoy the above relief benefits, such as suspension of repayment of principal and cancellation of accrued interest. However, when the payback begins next year, many Americans who are already struggling will increase again. An invoice.
Fifth, the preferential tax policy that provides no-layoff incentives to more than 125,000 companies will expire at the end of December, and companies will also lose the ability to defer payroll taxes and deduct business losses by then.
Finally, the $ 150 billion aid program for state and local governments will expire at the end of December. If there is no more aid by then, governments at all levels may need to cut schools, police, healthcare, and other projects, and public service capabilities will suffer even more.
On the other hand, from a macroeconomic perspective, Moody’s Analytics predicts that with the “rescue from the cliff,” the US economy will enter a new recession early next year, and the unemployment rate could be close to 10%. Federal Reserve Chairman Jerome Powell also recently said that the history of economic crises shows that Congress generally passes too few stimulus measures, rather than many people worrying too much. “Now, a little financial support will really help … Let’s suffer. This winter,” and supporting businesses and families until the vaccine allows broader business activities to resume.
The latest Beige Book released by the Federal Reserve indicates that the second wave of epidemics that previously worried policy makers will trigger a slowdown in the winter economy and is gradually forming a trend. At the policy meeting on December 15-16, the Fed will debate whether to provide more support to the economy. (CCTV reporter Gu Xiang)
